Report: IT Spending to Recover in 2010
A new report, “IT Spending in Recessions: 2009-2010 Forecast,” produced by Computer Economics, examines the results of recent surveys of IT executives and offers analysis and commentary on what’s in store in the coming 18-24 months.
Computer Economics IT spending surveys of nearly 20 years provide insight into how organizations changed their IT spending during the two previous recessions. Although the past is not always a precursor of the future, the firm found evidence that IT spending should rebound more quickly from the current recession than it did during the tech-led recession in 2001, following a pattern more akin to what occurred after the 1990-91 downturn. The firm said that its analysis of IT spending trends shows that businesses began restraining spending in late 2007, in anticipation of the downturn, and should be ready to renew IT investments by next year (2010).
Among the report’s findings and forecasts:
- Forecast for IT equipment and software investment: Assuming the pattern of recovery after the 2001 recession holds true today, expect a return to growth in the range of 5% to 10% in 2010.
- • Forecast for IT capital budgets: By 2010, many IT buyers will have delayed normal equipment refresh cycles and major new initiatives for two years. Computer Economics expects median annual growth in IT capital budgets in 2010 to rebound to between 4% and 5%, roughly at the level of growth seen in 2006 and 2007. A rebound in capital spending will be further aided by low interest rates and availability of credit to financially sound organizations.
- Forecast for IT operational budgets: The current recession is more like that of 1990 than 2001 in that IT organizations have cut operational budgets quickly in response to declining economic conditions. Assuming the pattern after the 1990 and 2001 recessions holds, Computer Economics expects between 60% and 65% of IT organizations will increase IT budgets in 2010. Based on the pattern shown after the 2001 recession, median IT operational budgets should grow 2% to 3% in 2010.
- Forecast for IT spending as percentage of revenue: IT executives have been restraining IT spending for the past two years. This reflects the atmosphere of cost containment that has prevailed in many IT shops during this decade. If the pattern of recovery after the 2001 recession repeats itself, Computer Economics anticipates median IT operational spending to reach 1.8% in 2010 and possibly 2.0% in 2011.
To learn more about this report please visit www.computereconomics.com or view the Executive Summary of the study.
Tags: IT, it spending
